Introduction and Overview to the Work Organisation Paradigm The work organisation paradigm has historically been structured on the basis of “scientific management” as extrapolated by Hamel and Prahalad (1990). However, the literature review of the work organisation demonstrates that this has changed and in turn demonstrated a shift towards companies adopting an organisational structure intended to unlock creativity and commitment of their employees as a benefit of growth (Pfeffer,1995).
Moreover, leading economist Joseph Schumpeter incorporated the term “creative destruction” as a central element of the contemporary capitalist business model; describing the process of transformation that accompanies radical innovation (Schumpeter, 1942). As such, it has been propounded that Schumpeter’s “creative destruction” analogy envisaged entrepreneurial vision as the force of sustained, long term economic growth, with the gales analogy symbolic of the destruction of monopolistic markets, which facilitated abuse of market position and power (Reinert, H. , & Reinert, E. S. , 2006).
In propounding such a vision of capitalism, Schumpeter extrapolated the business model framework for competitive markets, stating “capitalism, then is by nature a form or method of economic change” (Schumpeter, 1942). Furthermore, Schumpeter argued that innovation was the key to success and survival in a capitalist state. Schumpeter further argued that failure to adapt would ultimately result in the demise of the business, coining the process “creative destruction”.
To this end, Schumpeter’s theory suggests that the evolution and sustainability of a successful business model is not dependant on how capitalism administers existing models, but rather with how it destroys them through creativity to survive long term growth (Metcalfe, J. S. 1998). Moreover, the proliferation of different business models, work patterns has meant that the success of the working organisation is inherently dependent on greater participation and employee empowerment, through the concept of the “learning organisation” (Porter, 1996).
Interestingly and analogous to the position regarding Drugs Inc, many of these companies are in high pressured industries exposed to international competition, which forces corporations to constantly re-evaluate the working organisation model. Hamal and Prahalad argue that a central element of this is the shift in how companies compete with each other, with the underlying basis of competition moving towards “soft” factors such as reputation, service and market placement and positioning.
This in turn reflects the evolution of the “knowledge-based economy” (Hamal and Prahalad, 1994). From Drugs Inc’s perspective, the fall in profits and global pressures has clearly created a need to manage costs and flexibility, which in turn creates the need to change the dynamic of the work organisation. This report will set out a detailed report of recommendations regarding proposed changes to Drug Inc’s working organisation in light of the current external business pressures. 2. Analysis of Issues Facing Drugs Inc and Contextual Analysis
At the outset, the underlying issue facing Drugs Inc is that the external pressures of falling profits and increased competition in the global marketplace has created an internal pressure regarding staffing needs and working arrangements. As such, the obvious course of action for management would be to introduce flexible working arrangements. I shall undertake a contextual analysis of Drugs Inc’s position and put forward a summary of recommendations in section 3 below. Firstly, Drugs Inc’s situation would appear to link in with the notion of the “high performance work organisation” due to the industry it operates in and market position.
Pfeffer argues that fundamental changes in business environment such as those facing Drugs Inc are the central catalyst for changes in the work organisation (Pfeffer, 1995). In particular, Pfeffer refers to market maturity in most OECD markets, accompanied by increasing competition and fragmentation of customer demand and the market liberalisation, which in turn has reduced product market barriers as evidenced by the intense global competition faced by Drugs Inc. To this end, the globalisation of competition has highlighted the need for Drugs Inc to find novel methods of maintaining brand position and internal management of costs.
Furthermore, due to aim of Drugs Inc to become a world player in pharmaceuticals, many studies indicate that “high performance work organisation is most likely to be used by large companies in manufacturing and the Research and Development Sector (Reinert, H. , & Reinert, E. S. , 2006). Accordingly, Drugs Inc needs to preserve competitive intensity exposure (Porter, 1995). However, there are other forms of work organisations in response to pressures from globalisation and competition and the main business pressures here are general pressure from external business environment, opportunities and crises and internal business problems.
The literature review highlights that the new forms of work organisation are often portrayed as principally a means of cutting costs and formulating wide strategies to cope with the business pressures through improving flexibility in the workplace. Moreover, the “high performance work organisation” nature of Drugs Inc encompasses wide organisational changes and a main area of this is more flexible and less hierarchical working methods. Due to the current structure of the workforce, with different skill levels, I would initially recommend the implementation of a combination model of a semi-autonomous and flexible work force.
This would encourage team working and higher levels of accountability whilst simultaneously promoting multitasking through a reduction of hierarchy (Hamal & Prahalad, 1994) Pfeffer argues that most organisations incorporate flexible working hours and shift patterns to enable them to adapt to seasonal sales and irregular market surges in demand, whilst maintaining competitive position (Pfeffer, 1995). Indeed, introducing this could help Drugs Inc weather the profit storm and any other dramatic swings in demand.
Furthermore, it has been posited that the implementation of a multi-skilled and flexible working scheme as proposed above helps remove traditional boundaries between job categories through autonomous working (Karash, 1991). Interestingly, this shift in the working organisation model ties in with the “learning organisation”. The learning organisation is an evolving notion which has become increasingly incorporated into the modern company and multinational philosophy.
In its simplest form, Richard Karash propounds the ideology underlying the learning organisation: “A learning organisation is one which people at all levels, individuals and collectively are continually increasing their capacity to produce results they really care about” (Karash, R. 1995). The ideological underlying principle behind the learning organisation is that it produces a flexible workforce with a shared vision, which in turn ensures internal stability within an organisation. Mike Wills defines the learning organisation as a “group of people who work together” (Wills, M. 1998).
He further defines it as a “company, corporation, firm, enterprise or institution, or part thereof, whether incorporated or not, public or private, that has its own functions and administration. For organisations with more than one operating unit, a single operating unity may be defined as an organisation” (1998). Pedler, Burgoyne and Boydell define the learning organisation as “an organisation that facilitates the learning of all its members and continuously transforms itself to achieve superior competitive performance” (1991).
The concept traces its origins to the early writings on management trends in the 1930s and Schumpeter’s creative destruction theory (Pedler, Burgoyne & Boydell, 1991). This was further developed by neo-human writers such as Chris Argyris with his proposition of the “double-loop learning”, which reacted to the studies of corporate excellence undertaken by Peters and Waterman, identifying organisational behavioural trends (Argyris, C 1999). Within the contemporary business framework, personnel management theory highlights the importance of efficient employee relations and collective employee morale in achieving specific goals (Argyris, C 1999).
As such, Pedler argues that the learning organisation theory is central to this (Pedler, M & Aspinwall, K. , 1998). Garvin further asserts that organisational learning involves three stages. Firstly is the notion of “cognition”, which is the learning of new concepts, development of skills, which relates to employee performance (Garvin, D. 2000). This is further demonstrated in Figure 2 below, which illustrates Garvin’s model of the learning organisation: